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Thursday, January 19, 2017

The Power of Direct Mail in the Digital Age

For digital marketers, it ain’t all sunshine and rainbows. There are serious challenges inherent to the digital landscape that nobody is talking about.

Not long ago, advertisements were the end result of days, weeks, or even months of painstaking research and creative work. Ingenious ads from Coca-Cola, Kodak, McDonald’s, and even Marlboro cigarettes, for better or for worse, cemented many iconic brands into our country’s DNA.

Back then, most advertisements were smart enough to appeal to the masses, but targeted enough to drive sales within key demographics. And importantly, the advertisers considered the medium as a key player in each campaign’s success.

If an advertisement ran in Time magazine, or rolled out on a hit radio program, it gained instant credibility. The distribution channel provided inimitable authority – and it was worth the price.

More Ads, Less Authority and Impact

Today, the advertising landscape has fundamentally changed. Advertisements now flash before our eyes at blazing speeds. Each time we search, stream, watch, read, scroll, click, or swipe, we are bombarded by advertisements. And on social media, where the average person spends nearly two hours per day, ads are everywhere.

According to recent reports, the average American consumer is exposed to thousands of advertisements per day. In fact, it’s not unusual for the average consumer to see more than three hundred advertisements, of various sorts, within the first waking hour each day.

And while digital marketing experts can’t seem to agree on the exact number of ad exposures per day, it doesn’t really matter. This is because, in order to maintain our sanity, consumers have developed an autonomous mental screening process to ignore advertisements. As a general rule of thumb, about two percent of advertisements garner our valued attention each day. In other words, only about 100 out of every 5,000 ad exposures have any meaningful impact on consumers.

In the digital age, trust and authority, once a staple of each advertising medium, is fleeting at best. The primary channels we use to consume media, whether mainstream or social, have been so ravished by clickbait headlines and disinformation that consumers no longer inherently trust them. Gone are the days when the news was the news.

On the web, anyone (or company) with controversial content, marketing chops, and even a small marketing budget, can claw their way into the mix and make a profit. The money flows at the expense of credibility, performance, and ultimately, the advertisers behind it all.

Many digital marketers ignore these inherent issues because the data flow generated by digital campaigns allows for campaign optimization and deep analysis. While true, even with analytics, which are the lifeblood of digital marketers, the effectiveness of digital advertising has been called into question.

Serious Trust Issues

Digital advertising in today’s landscape is perilous because of two key factors: Quality and Saturation.

As reported by the Wall Street Journal earlier this year, Facebook Inc. announced that it had overestimated by up to 80% the average time people spent watching video ads on its platform (for two years!) – sending shockwaves through the media and marketing world. You can imagine how devastating that information was to some of the biggest advertisers in the world, who allocated countless millions of marketing dollars towards video content and promotion.

Secondly, there is a major increase in the sheer volume of low-quality content, most embedded with advertisements, saturating the digital landscape. In essence, the collective cache of content continues to grow, while ROI declines.

If quality drops, or an advertising channel becomes saturated with content of questionable authority, advertisers become concerned. A key consideration for any marketing campaign is the vehicle by which the message is communicated to an audience. In many cases, advertisers do not consider channels that don’t have built-in or credible reputations. The big agencies also prioritize authority and credibility.

As the digital universe, rife with uncertainty and struggling to find maturity, continues to evolve, advertisers are turning back to a timeless, if unlikely savior, in direct mail.

Yes, the great-smelling, world-building, and blissfully quiet printed medium that we all secretly love.

Mailbox > Inbox

I first started to notice the shift to direct mail when I received a Christmas catalog from Toys R’ Us in 2015. I have a two year old toddler at home, undoubtedly a data point in their system, which triggered them to send me a magazine-style catalog at the dawn of Q4. I vividly recall saying to myself, “This is cool, I remember looking for Nintendo games in these things when I was a kid.” I ended up purchasing his tractor toys for Christmas from them.

Shortly thereafter, my wife received a massive, yellow-pages-sized catalog from Restoration Hardware, a purveyor of home furnishings, décor, and other textiles. It must have weighed five pounds. Imagine if Amazon printed out their entire website, and you’ll get an idea of just how substantial it was. And consequently, she wanted just about everything they had to offer.

It wasn’t just catalogs either. I received, and redeemed, a plastic gift card offer for a free pizza at a new chain that opened up in town. When I got to the restaurant, I saw several other patrons holding the same offer in line.

On another occasion, our grocery store sent us a customized booklet of coupons. They sent us only the coupons that they knew would get us back in the store, based on our purchase history (so that’s what those rewards cards are really for).

It worked, we used them in-store that Saturday morning.

We also found our “window guy” from direct mail. Undoubtedly, that small business made a few grand from the forty-cent postcard they sent.

We joined a local gym too, because they mailed us an invite to try their built-in daycare service. Parents love that type of stuff.

Then, in November, my doctor reminded me to get a flu shot through a direct mail newsletter. I acted quickly, and stopped by his office before my flight to the INBOUND marketing conference in Boston.

Notice a trend here?

It is my actual mailbox, not my inbox, which has been the catalyst for a dizzying amount of spending.

People: Wired for Print

Local and national organizations, who advertise through direct mail, are much more likely to convince consumers to part ways with their hard-earned cash.

But why is this the case?

Let’s start with raw, scientific data generated by folks much smarter than myself.

Last year, a Canadian neuromarketing firm conducted a sweeping study for Canada Post that compared the effects of paper marketing (direct mail pieces, in this case) to digital media (email and display ads).

The firm used advanced eye-tracking and high-resolution EEG brain wave measurement tools, along with conventional methods such as questionnaires, to gather data.

The study produced two major results:

Direct mail requires 21% less cognitive effort to process than digital media, suggesting that it is both easier to understand and more memorable.

Overall effectiveness, referred to as the motivation-to-cognitive load ratio within the study, showed that direct mail scored an average 1.31 compared to 0.87 for all digital channels. This is significant because, in this type of test, values greater than 1.0 are indicative of broad in-market success.

Further, consumers who received direct mail offers were able to recall the brand 75% of the time. For consumers who received digital-only versions, the brand was remembered only 44% of the time.

According to the Forbes evaluation of this scientific research, “Science clearly shows paper can be more impactful and memorable than digital.”

The Direct Marketing Association has also published research in support of direct mail. In fact, the latest edition of the DMA Response Rate Report states that direct mail offers “strong return on marketing investment,” with an average ROI of 15% to 17%. They also note that oversized mailers, such as postcards, have the best response rates, at up to 4.25%, with a targeted mailing list.

Those are the types of numbers that marketers dream about.

The Importance of Targeting

Marketing is about effective, persuasive communication, and direct mail is no exception.

Success is based on a fundamental rule: Reach the right prospects, at the right time, with the right offer.

Competitive research, along with an analysis of existing customer and prospect databases, can yield valuable insight, and help advertisers build a persona for the ideal prospect.

The lift provided through targeting the right prospects, or through using similar audiences, can be substantial. As per the 2015 DMA Response Rate Report, the average response rate using a house list is 3.7%, while the average for a prospect list is 1.0%. A highly relevant offer, sent to the right audience, will typically drive up rates.

Here are three examples of direct mail offers, which were targeted to me, and motivated me to transact.

Blaze Pizza – FREE Pizza Offer

A new pizza chain, Blaze Pizza, recently opened in a shopping center located directly outside of our busy suburban neighborhood. To welcome new customers and make a good first impression, they sent local residents a postcard, targeted strictly by geography. It was the best offer of all-time — FREE PIZZA! After work, while flipping through the mail, I stuck it on the refrigerator. That weekend, I redeemed the offer and purchased additional items for my family who happened to be out with me. By the way, the pizza was really good. They definitely won me over.

Target – Baby & Toddler Coupons

Is it just me, or does Target know everything about everybody? They are marketing masters. Last month, they sent out postcards to new parents that contained $10 off coupons for diapers and other essentials. Although I didn’t personally use the offer, I gave it to my wife (Target-obsessed) who used it in combination with the Cartwheel app. I love the design of this piece because it is so simple. It has a picture of a baby and a Target logo. Without a single word, recipients know exactly what to expect and who it’s from. Sometimes less is more. And as far as targeting goes, this is a perfect example of how businesses can apply data from existing customers to drive future purchases.

Francisco Farms – Existing Customer Christmas Tree Deal

So this one is very close to my heart. As far back as I can remember, my parents took our family to Francisco Farms to pick out our Christmas tree. It was always a special day and it created beautiful memories that I will cherish forever. Now I’m a father, and I take my family to Francisco Farms to pick out our tree. Each year, they upload their database of customers and send out a simplistic, but effective postcard to each of their customers. Like clockwork, I use it to get a reduced rate on our annual purchase. Even the smallest of businesses can put targeted marketing to work for them. This is a great example of using good timing to influence purchases.

It doesn’t matter whether you’re a national brand or a small business. Direct mail provides opportunity for all advertisers.

No Distractions

Direct mail advertisements give people time to think. They provide new ideas with the space to grow into the things we didn’t know we wanted. These ideas morph into our must-have purchases.

With print advertisements, we’re not anticipating the next click.

There is no I-stared-at-a-screen-all-day eye strain. We’re not worried about battery-life. We’re not bombarded with competing ads from half a dozen alternatives who bid for our attention via algorithms.

We’re not interrupted by social media updates, text messages, and in-app notifications.

It’s quiet.

Perhaps most importantly, we are “forced” to consider each and every direct mail offer. It doesn’t matter whether we throw it into the trash or quickly make a purchase. We look at the offer and decide what to do with it.

The advertiser, much more easily, gets past our “mental wall”.

As a result, most people can tell you the names of dozens of local businesses that one day they will rely on to choose a new restaurant, fix a plumbing leak, or bring their dead lawn back to life.

That’s the power of direct mail in a digital world.

Did you know? With Kissmetrics, you can track the effectiveness of your online and offline advertising. Optimize your marketing by knowing which campaigns perform and which don’t. Check out our blog post to learn more.

About the Author: Chris Barr is the director of marketing for Taradel LLC, an Inc. 5000 marketing company. He loves working with small business owners, creating web content, and playing the drums. Connect with him on LinkedIn or at the Taradel blog.